ARC WHITEPAPER


SEPTEMBER 2007




                   Achieving Compliant Manufacturing Excellence
                   thr...
ARC Whitepaper • September 2007




                      Greg Gorbach
                      About the Author:
           ...
ARC Whitepaper • September 2007




                 Executive Summary

                 Life Sciences manufacturers are f...
ARC Whitepaper • September 2007




                      In many companies, it falls to IT to envision new business possi...
ARC Whitepaper • September 2007




Manufacturing Excellence in Regulated
Industries

Bio-pharmaceutical or medical device...
ARC Whitepaper • September 2007




                       Today’s Compliance Challenges

                       With expa...
ARC Whitepaper • September 2007




quality of the materials used. This means tracking supplier quality ratings,
incoming ...
ARC Whitepaper • September 2007




                      CAPA
                      Corrective And Preventive Action (CAP...
ARC Whitepaper • September 2007




 windows, faster turnaround, and more customer status inquiries. The situa-
 tion is e...
ARC Whitepaper • September 2007




                      managers may be missing their budgets more frequently. Perhaps v...
ARC Whitepaper • September 2007




                       tions help companies achieve a higher level of manufacturing ex...
ARC Whitepaper • September 2007




                      lence, while supporting the corporation in excellent overall bus...
ARC Whitepaper • September 2007




               Many manufacturers are beginning to use systems to collect and contextu...
ARC Whitepaper • September 2007




                         Greater Than the Sum of the Parts
                         As...
ARC Whitepaper • September 2007




                                                 SAP xMII
                            ...
ARC Whitepaper • September 2007




                      refers to the unification of information, so that users in vario...
ARC Whitepaper • September 2007




various systems. The second goal was integration between plant and enter-
prise applic...
ARC Whitepaper • September 2007




                      of coordinated metrics throughout various levels and regions. Me...
ARC Whitepaper • September 2007




                    Summary

                    Manufacturers recognize that they nee...
ARC Whitepaper • September 2007




                      customer goes waiting. Real-time solutions create ROI by exposin...
ARC Whitepaper • September 2007




             Fig 6: SAP xMII in a Multi-Plant Context




Founded in 1986, ARC Advisor...
3 ALLIED DRIVE DEDHAM MA 02026          USA       781-471-1000

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Achieving Compliant Manufacturing Excellence through Real-time Performance Management

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Consider how life sciences manufacturers can deal effectively with dynamic market needs, increased compliance requirements, more distributed manufacturing operations, and rapid product innovation.

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Transcript of "Achieving Compliant Manufacturing Excellence through Real-time Performance Management"

  1. 1. ARC WHITEPAPER SEPTEMBER 2007 Achieving Compliant Manufacturing Excellence through Real-time Performance Management and Continuous Improvement Executive Summary .....................................................................3 Manufacturing Excellence in Regulated Industries ............................5 Today’s Compliance Challenges .....................................................6 Additional Challenges...................................................................8 Real-time Performance Management ........................................... 10 Synchronized Manufacturing Operations ....................................... 15 Realizing Manufacturing Excellence .............................................. 17 Summary ................................................................................. 19 THOUGHT LEADERS FOR MANUFACTURING & SUPPLY CHAIN
  2. 2. ARC Whitepaper • September 2007 Greg Gorbach About the Author: Greg Gorbach: As ARC‟s Vice President, Collaborative Manufacturing and Architecture, Greg Gorbach is a thought leader in Collaborative Manufacturing and provides clients in a number of manufacturing vertical markets with strategic advice in dealing with boundary-crossing business processes. Greg’s primary areas of focus are Collaborative Manufacturing, Oper- ations Management, Business Process Management, Manufacturing Performance Services, and the synchronization of plant systems with CRM, ERP, PLM, Supply Chain and other business systems. He brings over twenty years of hands-on experience to ARC, with direct experience within manufacturing organizations, as well as extensive ex- perience with suppliers to manufacturers. This paper was commissioned by SAP. For additional information about SAP products and services, please contact SAP at: www.sap.com 2 • Copyright © ARC Advisory Group • ARCweb.com
  3. 3. ARC Whitepaper • September 2007 Executive Summary Life Sciences manufacturers are feeling new pressure on their operations from many directions. Dynamic market needs, increased compliance re- quirements, more distributed manufacturing operations, rapid product innovation, Lean manufacturing, and the approaching transition to new IT technology all manifest themselves on the plant floor and throughout the en- terprise - and often lead to pleas for new technology solutions. Compliance management, integration, and data utilization are key issues to address in order to improve responsiveness and performance. Many manufacturing companies recognize that improving corporate perfor- mance demands better synchronization with the plant floor. At the same time, moving to a risk-based approach to compliance may require new sys- tems and improved data visibility. For too long, manufacturing has been isolated. Most of the important production data has not been easily accessible, and is therefore not very useful in improving performance. Today, however, feasible solutions are available to drive excellence in manufacturing performance through better manufacturing intel- ligence and integration. Real-time Performance Management (RPM) solutions acquire manufac- Fig 1: Value Network Dynamics Drive Manufacturing turing data in real-time, establish Performance Requirements; Better Integration and Data Utilization Enable Manufacturing Excellence and the operating context for that data, Optimal Real-time Performance and ensure that it is stored in a manner that makes it accessible at later times for a variety of uses. RPM facilitates the visibility of this real-time manufacturing data to users throughout the enterprise, and includes tools for enhanced decision support and role-based display of performance against operating metrics. Event-based triggers notify all who should be informed when important or unforeseen events take place. These solutions help com- panies achieve a higher level of manufacturing excellence by allowing them to better leverage their detailed manufacturing information. Copyright © ARC Advisory Group • ARCweb.com • 3
  4. 4. ARC Whitepaper • September 2007 In many companies, it falls to IT to envision new business possibilities in concert with the technologies needed to realize them. At the same time, the usual job of reducing the cost of doing business through increased efficiency and productivity cannot be ignored. This paper outlines how modern solu- tions can support both strategies at the same time. Sample Business Challenges Strategies Healthcare marketplace changes increa- Drive efficiency to world-class levels; singly are constraining prices and hence for example, from 60% to 85% by bet- profitability ter utilizing manufacturing data Manufacturing to high quality standards; Achieve significant improvement in First need to reduce the “cost of quality” and Pass Yield and OEE by improving visi- improve productivity bility of quality data Increase competitive advantage by driv- Reduce operation costs through in- ing down production costs and COGS creased yield and efficiency; reduce material waste; avoid expensive peak outsourcing of manufacturing and dis- tribution by improving utilization of existing plant and facilities Regulations seek to establish that each of Document that Standard Operating Pro- “5 Ms” (Man, Machine, Materials, Method, cedures (SOPs) are followed by certified and Measure) has been used appro- operators on certified equipment, and priately during manufacturing. that approved manufacturing route, Bill of Materials (BOMs), recipes, and work instructions or manufacturing bills are used. Need to continuously improve margins Reduce operation costs through in- and cost structure in core businesses to creased yield and efficiency fund product development and growth in new markets Imperative to improve competitive posi- Reduce or eliminate non-value added tion through innovation. In order to get work to free up time for innovation by to the next level, need creative solutions providing data and analysis tools. Pro- and improvements to the manufacturing vide broad information visibility and process. analytics to spark innovative ideas. Our Balanced Scorecard methodology Provide real-time manufacturing per- needs information from sources outside formance information to corporate our ERP system performance systems. Our Six Sigma methodology has become Automate the Six Sigma Control Plans ingrained in our culture, but our Six Sig- and provide real-time, exception-based ma Control Plans have a limited value notifications to owners so they can take because they exist as a spreadsheet or immediate action. Word document and are difficult to ad- here to. To maintain and improve responsiveness Increase data utilization: move from and customer satisfaction, Plant opera- data collection, to performance visibility tions needs to be better integrated with and analytics, to closed-loop business business systems and the supply chain scenario deployment Table 1: Today’s Business Challenges Require Strategies Based on Better Utilization of Manufacturing Data. 4 • Copyright © ARC Advisory Group • ARCweb.com
  5. 5. ARC Whitepaper • September 2007 Manufacturing Excellence in Regulated Industries Bio-pharmaceutical or medical device manufacturers can achieve compliance with FDA and EU/ISO regulations by focusing on specific processes that in- fluence product quality and safety. High-risk processes can be identified using a scientific risk-based assessment, an approach supported by regulato- ry agencies and industry. By focusing on manufacturing excellence, manufacturers can reduce the cost and time needed to achieve and maintain compliance. A manufacturing performance excellence focus yields better production management and recordkeeping, documented compliance with regulations, and profitability, flexibility, and quality [Table 1]. Compliant Manufacturers in the Life Sciences industry pursue excellence in manufacturing operations. Comparable to ARC‟s Collaborative Manufacturing Management, SAP‟s Compliant Manufacturing is a vision for how companies participate in an ecosystem or business network, are able to leverage the network‟s cumulative ability to plan and anticipate demand and supply, ex- ecute plans efficiently and effectively, comply with appropriate regulations, sense meaningful events in real-time, and respond to and learn from ever- changing business conditions. Manufacturing Excellence is a critical aspect of compliant manufacturing op- erations for regulated industries. Excellent performance is characterized by the ability to react quickly to changing marketplace conditions, to dynamical- ly reflect these changes in production targets, and to efficiently and reliably achieve these targets. It also requires ongoing cost reductions and quality improvement. In order to achieve manufacturing excellence, manufacturers need to manage based on real-time performance information. Grounded in operations, Real- time Performance Management (RPM) encompasses the processes, metho- dologies, metrics, systems, and information needed to measure and manage the performance of a manufacturing organization. RPM places particular emphasis on: acquiring and using real-time, plant level, performance and operating data; providing actionable intelligence based on analytics, event triggers, and visibility; KPI support; and, integration to business systems. RPM provides the real-time plant level information needed by the planning and financial reporting/analysis functions of Corporate Performance Man- agement systems. Copyright © ARC Advisory Group • ARCweb.com • 5
  6. 6. ARC Whitepaper • September 2007 Today’s Compliance Challenges With expanding regulatory initiatives [Table 2] and tighter enforcement poli- cies, bio-pharmaceutical and medical device manufacturers need to have a better view of manufacturing data as well as business processes that span departments and applications. They need to en- Regulated Applicable force manufacturing best practices, while ensuring Process Areas Regulations and documenting regulatory compliance. Specific Equipment and FDA 21 CFR Part 820.75, regulated process areas and associated functional Facilities Part 211 subpart C and D requirements for compliance are outlined here. Production and FDA 21 CFR Part Process Control 820.70/72/75 Part 211 subpart F and I Equipment and Facilities EU/ISO 13485: 6.3, 7.5, Life Sciences manufacturing requires a suitable en- 7.6, 8.2.3 vironment and specific equipment that is properly Materials FDA 21 CFR Part 820. Incoming 50/80/86 maintained and calibrated. Specified and actual Inspection Part 211 subpart E manufacturing information must be monitored and EU/ISO 13485: 7.4.1, 7.2.2, 7.4.3, 7.5.3.2 recorded. Compliance solutions should qualify equipment suitability, verify environment status, Product Design FDA 21 CFR Part 820.30 and Definition verify status of equipment and resources at time of manufacture, support dynamic process routing, and Validation FDA Guidance, Part 11 assure proper maintenance and calibration. Revision Control FDA 21 CFR Part 820.40 EU/ISO 13485:4.2.3 Production and Process Control Identity Control 21 CFR Part 11, EU cGMPs Consider the "Five M's" for controlling manufactur- Quality and SPC FDA 21 CFR Part 820.250, Part 211 subpart F ing processes: Man, Machine, Materials, Method, EU/ISO 13485: 8.1, 8.2.3, and Measure. Regulations in this area seek to estab- 8.2.4, 8.4 lish that each has been used appropriately during CAPA FDA 21 CFR Parts 820.100 manufacturing. Manufacturers must ensure that Part 211 subpart F EU/ISO 13485: 8.5.2, 8.5.3 Standard Operating Procedures (SOPs) are fol- lowed by certified operators on certified equipment. Traceability FDA 21 CFR Parts 820.60/65 It is important to document manufacturing routes, Part 211 subpart J approved Bill of Materials (BOMs), recipes, and EU/ISO 13485: 7.5.3, 7.5.5 work instructions or manufacturing bills. Some Device, Batch FDA 21 CFR Part 820.184 manufacturing in the life sciences industries re- History Record Part 211 subpart J EU/ISO 13485: 4.2.4 quires solutions that integrate Statistical Process RMA and Com- FDA 21 CFR Parts 820.200 Control (SPC) with production. plaint Tracking EU/ISO 13485: 7.5.1.2.3, 7.5.1.3 Materials Incoming Inspection Table 2: Major Regulated Processes in Life Sciences Manufacturing The quality of the finished product depends on the 6 • Copyright © ARC Advisory Group • ARCweb.com
  7. 7. ARC Whitepaper • September 2007 quality of the materials used. This means tracking supplier quality ratings, incoming quality assays and audits, material review, and integrated supplier Corrective and Preventative Action solutions. Solutions should manage and document raw material inventory, track raw material receipts, provide for receiving and final acceptance, and link to LIMS systems. Product Design and Definition In the medical device industry, it is critical to ensure that manufacturing stays in synch with product design changes, and that traceability extends to design documentation. Manufacturers must document implementation of Engineering Change Orders (ECO) and ensure that manufacturing process documentation changes are made as of the effective date. Solutions should provide revision controlled routings and BOMs, and generate Device Manu- facturing Records and Device History Files. Process Validation and Revision Control In the bio-pharmaceutical industry, manufacturing systems and their sub- systems must be validated with adequate change control. This requires Iden- tity Assurance Management for access and authorization. Timely notification of unauthorized attempts to access is also required. When changes are made, the proper approvals are secured and changes are tracked. This requires electronic signatures for revisions, adequate change control capability, and the ability to ensure that proper versions of work instructions, recipes, and SOPs are presented to the operator in production. Identity Control Assuring the identity of the person taking an action is critical to meeting reg- ulatory requirements. The FDA states that there must be an environment that ensures the "non-refutability" of a person's signature. Identity Assur- ance Management should provide uniform procedures, a common presentation across the platform, and a multiple application specific technol- ogy capability. Quality and SPC Collecting, analyzing, and acting upon quality data is critical in any com- pliance situation. Critical to manufacturing excellence are parametric data collection and quality analysis tools to show yields, defects, and the like. SPC capabilities should allow for custom SPC rules with rule violation trig- gers to generate alerts or actions such as material holds. Copyright © ARC Advisory Group • ARCweb.com • 7
  8. 8. ARC Whitepaper • September 2007 CAPA Corrective And Preventive Action (CAPA) solutions must touch all aspects of manufacturing, and extend to external complaints as well as incoming ma- terials and suppliers. These systems should track and resolve non- conformances, track failed acceptance criteria, provide flexible tools for the design and execution of CAPA workflows, leverage SPC functionality for root cause analysis, and facilitate the implementation of corrective actions. Forward and Backward Traceability Manufacturers must be able to track units, lots and batches from end to end, no matter how complicated or simple the manufacturing process. This requires unit, lot, and batch tracking and date code capabilities. Tracking lots through „splits‟ and „combines‟ is also required. Device or Batch History Record Preparing for audits or required reporting is facilitated with an electronic Device or Batch History Record. This requires as-designed, as- manufactured, and as-maintained traceability, with an easily retrievable and viewable Device or Batch History Record, including links to other required records associated with the Device or Batch History Record. RMA, Complaint Tracking, and Adverse Event Reporting Post-production services such as complaint tracking, Return Materials Au- thorization, and field service must link back to manufacturing in order to correct and improve the manufacturing process. RMA tracking, complaint or adverse event tracking, as-maintained information capture, and integration to CAPA systems should be provided. Additional Challenges Life Sciences manufacturers are directly feeling new pressure on their opera- tions and it comes from many directions simultaneously. Dynamic market requirements, increased compliance needs, more distributed manufacturing operations, rapid product innovation, Lean manufacturing, and the ap- proaching transition to new IT technology all manifest themselves on the plant floor. Too often, the symptoms go unrecognized. For example, it may be that supervisors are in a constant state of firefighting, or spending more and more time expediting. This can be related to shorter delivery promise 8 • Copyright © ARC Advisory Group • ARCweb.com
  9. 9. ARC Whitepaper • September 2007 windows, faster turnaround, and more customer status inquiries. The situa- tion is exacerbated when plant personnel are not immediately informed about manufacturing exceptions, because small perturbations have a much larger impact when the system is running under pressure [Table 3]. In other cases, operators may be missing their performance targets and are unable to meet continuous process improvement goals. Business and plant Production Data Issues Remedies Key data is in Excel spreadsheets, clip- Collect key data electronically and make boards, applications, production it widely available throughout the or- lines/equipment, and databases ganization Plant production data needed by ERP is Automatically collect and transfer plant manually collected, often re-entered, and data needed by ERP manually transferred from spreadsheet to spreadsheet as it moves from plant data sources to the ERP system It is very difficult to get information that Collect and contextualize data from all is in different departments. Different departments electronically in real-time systems/applications, conventions, busi- and make it widely available throughout ness cycles, and the like complicate the the organization collection and rationalization of data It is difficult, time-consuming, and costly Speed analysis and minimize cost by to interpret the data and prepare leveraging solutions that provide graph- graphs/charts/reports that help identify ical display, drilldown, and analytical problems and root causes tools. Shop floor technicians enter some data Provide a simplified “front” screen for via three, four, or five ERP screens. This ERP data entry. is too time-consuming and is prone to errors. We’ve gotten good at collecting lots of Provide a unified, consistent view of data – but our needs have matured and data; visualization and analysis tools, we need to integrate that data with other and robust integration. areas. Our schedule is on a big whiteboard Electronic schedule with extensive visi- bility, linked to real-time performance data. We have to respond to customer Quality Dramatically reduce the burden of re- Notifications, even though the issues search to answer customer quality and may not end up being traceable to our production inquiries. Collect and con- products (because a number of materials textualize data from all departments come into play simultaneously down- electronically in real-time and make it stream in our customer’s manufacturing widely available throughout the organi- processes). It can take 5-7 days to pull zation. Speed analysis and minimize together the data needed to satisfy the cost by leveraging solutions that pro- customer vide graphical display, drilldown, and analytical tools. Table 3: A Sampling of Typical Issues Manufacturers Encounter When Production Data is Underutilized Copyright © ARC Advisory Group • ARCweb.com • 9
  10. 10. ARC Whitepaper • September 2007 managers may be missing their budgets more frequently. Perhaps variations in manufacturing performance across shifts, lines and plants are inexplicably widening. These may all be signs that things are beginning to slip because people are no longer able to effectively monitor, measure, analyze, control and improve key performance indicators (KPIs) against targets as the pace increases. Managers cannot get the information they need to measure and control actual production costs against targets, and supervisors waste time accessing and searching through multiple systems for needed data. In mid-size and larger manufacturing enterprises, the problems are com- pounded by the need to assess and improve performance across multiple, possibly globally distributed, facilities and business units. Without accurate and timely asset-to-asset and plant-to-plant comparison data, this is difficult and impractical. To address these challenges, manufacturers need solutions that allow them to see and use real-time information from operations. They need solutions that facilitate excellent manufacturing performance and enterprise-wide process synchronization. Real-time Performance Management Real-time Performance Management (RPM) is a term that describes all of the processes, metrics, techniques, and systems needed to measure and manage the performance of a manufacturing organization. RPM is primarily focused at the plant level but has significant touch- points within the business systems. It complements and extends Corporate Performance Management systems [Figure 2] [Table 4]. RPM solutions acquire manufacturing data in real-time, estab- lish the operating context for that data, and ensure that it is stored in a manner that makes it accessible at later times for a variety of uses. RPM facilitates the visibility of real-time man- ufacturing data to users throughout the enterprise, and includes tools for enhanced decision support and role-based display of performance against operating metrics. Event-based Fig 2: RPM Enables Adaptive Manufacturing triggers are also provided to notify all who should be informed when important or unforeseen events take place. These solu- 10 • Copyright © ARC Advisory Group • ARCweb.com
  11. 11. ARC Whitepaper • September 2007 tions help companies achieve a higher level of manufacturing excellence by allowing them to better leverage their detailed manufacturing information. Another important role for RPM solutions is to synchronize the plant floor with increasingly dynamic business operations. This includes providing en- terprise-wide visibility of manufacturing data, including certain operating data, compliance information originating in the plant, and capacity and cost data. Information needs to flow in both directions, to support work planning and deployment as well as plant floor visibility of selected financial informa- tion for plant floor metrics. As the need to use manufacturing data matures, business processes become more automated, and closed loop scenarios begin to operate between business systems and plant systems. RPM solutions pro- Function CPM RPM Notes (Definition) Corporate Real-time CPM is an umbrella term that describes all of the Performance Performance processes, techniques, metrics, and systems Management Management needed to measure and manage the performance of an organization. RPM extends this to real-time manufacturing information. Planning Strategic Provide Real-time Strategic planning, sales planning, expense plan- Planning, Sales Mfg data for ning, and risk analysis. Establish data, process, and Planning, etc. Corporate Plan- policy requirements. Budgeting, modeling, plan- ning Activities ning, forecasting. Financial General Ledger, Financial compo- Multi-jurisdiction, reports, financial feed to metrics; Reporting & A/R, A/P, & nent of plant provide compliance info to financial sys- Analysis other financial metrics; tems/executives. analyses; Compliance info Consolidation from plant Intelligence/ BI/Decision MI/Decision Performance indicators, reporting, analysis, dash- Decision Support Support boards, queries, alerts, notification, event/activity Support management Metrics/ Corporate Production KPIs, Metrics mgt, Planning-based metrics, Reporting, Scorecarding Metrics Real-time OpX etc. Establish targets, link metrics to underlying Management Data data, maintain and show relationships among me- trics; drive Continuous Improvement initiatives Real-time n/a Real-time Manufacturing data acquisition, contextualization, Manufacturing Manufacturing processing, storage Information Information Business n/a Business Closed loop business process integration; enter- Integration Integration prise-wide visibility of mfg data; Plant visibility of selected financial info for metrics Table 4: RPM Complements and Extends Corporate Performance Management vide the real-time manufacturing data, information, analysis, and synchronization needed to operate at a high level of manufacturing excel- Copyright © ARC Advisory Group • ARCweb.com • 11
  12. 12. ARC Whitepaper • September 2007 lence, while supporting the corporation in excellent overall business mance. It is important to distinguish real-time solutions from solutions that provide information on a daily or weekly basis. Real-time solutions make informa- tion “actionable” at the point in time when it has the greatest potential impact. This can mean the difference between one or two items and a whole day‟s worth of out-of spec product taking up space, waiting for disposition as scrap or rework while the customer awaits delivery of their orders. Real- time solutions create ROI by exposing business opportunities that might oth- erwise be lost. In today‟s competitive environment, “Manufacturing Excellence” represents far more than just making the machines and personnel in the plant effective. Compliant Manufacturers respond proactively to unforeseen events, excep- tions, and increasingly rapid changes in demand and supply. The manner in which that manufacturer utilizes plant floor data determines their ability to do this effectively. Historically, some data is gathered manually and other data accumulates in isolated plant systems. Data gathered in this manner may serve as a historical record, but is essentially unavailable for use in daily operations or for continuous improvement programs. Fig 3: Manufacturing Excellence Depends Upon the Robust Use of Manufacturing Data 12 • Copyright © ARC Advisory Group • ARCweb.com
  13. 13. ARC Whitepaper • September 2007 Many manufacturers are beginning to use systems to collect and contextual- ize plant data and make it visible to a variety of users. The availability of real-time information aids in operational decision-making and the organiza- tion reaps benefits in the form of efficiency and yield improvements, OEE, and the like. Analytical tools extend the ability to make better decisions. Adding event-triggered alerts reduces the reaction time for changes, failures, opportunities, and problems, and can significantly improve overall perfor- mance. Responses to certain alerts can be preordained and enforced by workflow solutions, further enhancing performance. Organizations can reap even greater gains when workflow or business process management tools are used to synchronize business processes across departments and operations and between business and plant floor systems. Solutions for this level of synchronization can also typically support multiple plants with a normalized view of performance across disparate systems. At the highest level, organizations can leverage the plant data/information to support the use of tools for modeling new business processes and the change management process for implementing them. Fig 4: Improve Manufacturing Excellence by Using Data Effectively and Extending RPM to the Enterprise and Across the Supply Network Copyright © ARC Advisory Group • ARCweb.com • 13
  14. 14. ARC Whitepaper • September 2007 Greater Than the Sum of the Parts As RPM is rolled out beyond the original pilot implementation, higher levels of benefits are obtained. Since RPM “snaps on” to existing systems, instead of replacing or replicating them, an extended deployment can proceed at a rapid pace. In addition, RPM is an approach that supports all categories of metrics such as Assets, Quality, Manufacturing, and Cost, and therefore a single solution can deliver performance benefits in all of these areas. When a significant portion of one plant‟s operations are involved [Figure 4], that plant sees better performance as well as better service to its customers. As RPM is extended to multiple plants and the bulk of the enterprise, business managers at all levels are empowered to make better decisions based on a unified view of the distributed real-time manufacturing data. This can lead to a quantum change in performance for any manufacturing enterprise. Each plant has the information necessary to optimize its efforts in support of en- terprise priorities. Regional and corporate managers have accurate information feeding their planning, allocation, risk management, and report- ing systems. The enterprise as a whole becomes much more adap- tive, and able to compete in previously unreachable areas. Real-time Manufacturing Data and Continuous Improvement A common use of RPM is to pro- vide data for the Measure phase of Six Sigma DMAIC processes. This can be implemented as data that appears in a quality dash- Fig 5: SAP xMII Synchronizes Manufacturing Operations with board. Leading manufacturers the Enterprise, in Heterogeneous Plant Floor IT Landscapes take this a step further. Instead of trying to manage the Control phase with plans drawn up in Microsoft Word or Excel documents, they use RPM to automate the control plans and notify process owners in real time about events or exceptions so that they can im- mediately take action. This approach can have a huge impact in the effectiveness of existing Six Sigma programs. Linking performance against metrics with Continuous Improvement speeds the improvement cycle, which creates more awareness of the value of RPM at other locations, as well as a functional baseline so new installations can be deployed more quickly. 14 • Copyright © ARC Advisory Group • ARCweb.com
  15. 15. ARC Whitepaper • September 2007 SAP xMII SAP xMII connects to a wide variety of plant systems and data sources, such as MES, DCS, HMI, Plant Historians, Laboratory systems, Maintenance sys- tems, and other data sources [Figure 5]. It establishes the production context for data from these systems and makes the information visible to users and available to other applications. It also provides Category Description analytical tools to aid in decision-making and Data Bi-directional data access integration services to facilitate connectivity to Services Metadata browsing business systems. Manufacturing Integration XML-based data abstraction Connectors to external sys- tems SAP xMII collects and contextualizes plant data and make it visible to a variety of users. It sup- Business Logic Logic Integration services ports optimal decision making by providing Services Notification services “unified” real-time information and analytical Calculation and data transformation, tools. Event-triggered alerts speed reactions, Content creation problem identification, and problem resolution. Visualization Charts, Grids, tickers, UI con- It provides workflow-based responses, which Manufacturing Intelligence Services trols, can be configured for certain alerts. SAP xMII‟s Dashboard components integration capability includes synchronizing Analytic Ser- SPC/SQC (Six Sigma) analyses business processes across departments and oper- vices Statistical and other mathematical analyses ations and between business and plant floor Web All services exposed as web systems. It scales to support multiple plants with Services services a normalized view of performance across dispa- Includes user-defined rate systems. SAP xMII plant data/information composite services is readily available to inform tools for modeling Table 5: SAP xMII Core Functionality: Manufacturing Integration and Intelligence new business processes and the change man- agement process for implementing them. Synchronized Manufacturing Operations SAP xMII enables Compliant Manufacturing to drive manufacturing excel- lence by synchronizing manufacturing operations with business systems to deliver “one version of the truth”. Without such a solution in place, bad de- cisions can be made due to out of date or wrong data, or because different plants or departments have different methods and algorithms for populating the data. At best, it wastes time to sort this all out, and delayed decisions lead to lost profits and lost opportunities. “One version of the truth” is not intended to imply that there must be a single data repository for all data. It Copyright © ARC Advisory Group • ARCweb.com • 15
  16. 16. ARC Whitepaper • September 2007 refers to the unification of information, so that users in various roles have personalized views of different aspects of the same information at the same time. This unified view of manufacturing information is provided by the combination of Manufacturing Intelligence – a real-time analytics engine that aggregates and delivers unified visualization of events, alerts, KPIs, and decision support to production personnel and appropriate other parties through role-based Enterprise Portal dashboards - and Manufacturing Inte- gration – a single, standards-compliant application enabling bi-directional SAP ERP connectivity into real-time plant floor applications to drive efficien- cy in enterprise business processes, whether in a single plant or across multiple plants, business units, and regions. Early adopters have identified performance improvements primarily in the areas of yield, production output and Labor. Adverse events trigger quick responses, so the line runs better and with more uptime. More product is created faster (production) while less material is needed for a given output (yield). Labor savings come from three primary sources: Less labor is needed to clear out and dispose of bad product; a more efficient line can lead to reductions in contingent labor, such as extra workers who can jump in to fix problems, crank out additional work or support additional shifts; and, in many cases, a significant reduction in labor occurs as the need to manually collect, analyze, and chart data is eliminated. How One Pharmaceutical Manufacturer Improved Performance and Reduced Cost with SAP xMII A large Pharmaceutical manufacturer, who is known for innovative products and services, and as a leading supplier of medicines in its key markets, em- ploys approximately 70,000 people in 150 countries. Having identified some fairly typical performance issues, this European-based company decided to introduce SAP xMII for data collection from a variety of sources, visibility at operator‟s workstations, and enhanced data transfer between systems. Prior to the implementation, the production staff could not easily identify issues and root causes, so reaction times were slow. Too much time and labor was used in manually copying and transferring data among multiple databases. Too often, wrong entries were made in validation or quality-critical processes. All of these issues were eliminated or improved with the imple- mentation of SAP xMII. The initial goals for the SAP xMII project were threefold. They sought to provide time-optimized, structured visualization of production data from 16 • Copyright © ARC Advisory Group • ARCweb.com
  17. 17. ARC Whitepaper • September 2007 various systems. The second goal was integration between plant and enter- prise applications. And they wanted to improve performance by automating and enforcing pre-defined workflows and transactions in response to speci- fied production events. SAP xMII enabled the company to continuously display the duration of process phases executed on certain equipment for batch production, allowing monitoring and analysis. Using the dashboard, users could now access process data from an OSI PI Historian system. Batch and plant data were displayed for a certain time slice, with all information presented in struc- tured form. Process events were used to control the display and calculation of minimum, maximum, and phase times, together with standard deviations. Two plant-to-business integration scenarios were implemented. The first involved the SAP ERP (PP PI Module), an Oracle database, an OSI PI Histo- rian, and a SCADA operator panel. SAP process orders were combined with product-and phase-related setpoints, stored in a SQL database, and dis- played for plant operators. The second integration scenario was to calculate material consumption in batch production, and transfer the value to the SAP ERP system. In this case, the SAP ERP MM module, an OSI PI Historian, and an Oracle database were involved. SAP xMII monitored batch completion and obtained material consumption, plant and phase information, and PI tag names from the Oracle database. It computed start and end times for each material consumption, and transferred consumption values, material num- ber, batch ID, and consumption time to SAP ERP. This Pharmaceutical manufacturer realized significant process improvements by Performance Monitoring and Plant-to-Business integration with SAP xMII. They improved performance by enforcing planned reactions to events. They reduced the manual effort involved in data collection and transfer among databases. And they reduced cost associated with inaccurate data entry. Based on this project, multiple additional SAP xMII were justified. Realizing Manufacturing Excellence Performance is the measure of manufacturing excellence, but how should performance be measured? Unfortunately, no single measure is appropriate for every manufacturing enterprise. Small scale deployments may focus on OEE or cycle time, while enterprise-wide deployments require a complex set Copyright © ARC Advisory Group • ARCweb.com • 17
  18. 18. ARC Whitepaper • September 2007 of coordinated metrics throughout various levels and regions. Metrics may be crafted around profitability, asset utilization, quality, headcount, customer satisfaction, and the like, but in the end, the performance measures currently relied upon by your company and your industry are likely to be the best me- trics to use to begin leveraging your manufacturing data in new ways to achieve manufacturing excellence. Improving the performance of the IT group can sometimes improve the per- formance of the entire enterprise. With real-time data, it becomes easy to prepare and distribute reports that were infeasible before. Armed with this information, managers, supervisors, and operators make better decisions and business performance improves. In many companies, the IT group has be- come increasingly burdened by supporting homegrown and legacy plant systems. An RPM solution can replace some of these applications, but a more powerful strategy is “front-ending” legacy applications. With this ap- proach, RPM user interfaces mimic those of legacy applications so the introduction of RPM has little or no impact on the operators. Once it is in place, rationalization of the underlying systems can proceed at any desired pace without further impact. This in itself can justify many projects, based on improving IT productivity by reducing legacy applications support costs. To be sure, plant operations can benefit directly - in terms of reductions in variable labor and overall production cost, together with increases in yield and production output. In addition, more productive use of capital equip- ment can enable manufacturers to avoid adding additional capital equipment in order to get more output. It can also reduce the need to contract out man- ufacturing during demand peaks. Early adopters have reported dramatic changes in the effectiveness of their morning meetings, which set the tone for the rest of the day. Instead of working from static, dated reports, manufacturing teams begin using the live RPM system at the daily meeting. Performance problems are spotted and addressed immediately, using the system to drill down to individual events and equipment to understand root causes. In some cases, Six Sigma or TPM leaders are given action items to conduct further analysis –again leveraging data from the live system. 18 • Copyright © ARC Advisory Group • ARCweb.com
  19. 19. ARC Whitepaper • September 2007 Summary Manufacturers recognize that they need IT solutions designed to improve performance in order to respond to dynamic market pressures, to become more flexible, adaptive, and compliant to enhance competitive positioning. Real-time Performance Management (RPM) solutions acquire manufacturing data in real-time and synchronize the plant floor with increasingly dynamic business operations. These solutions drive excellence in manufacturing per- formance through better manufacturing intelligence and integration. They provide enterprise-wide visibility of manufacturing data, including key op- erating data, compliance information originating in the plant, and capacity and cost data. These systems are relatively light touch and minimal risk, be- cause they leverage existing systems and do not require expensive rip-and- replace or replicate strategies. They are also Category Strategic Benefit relatively quick to deploy, so value is rapidly generated. Despite this, they can have a po- Corporate Real-time manufacturing data Performance enhances corporate decision- werful impact in two ways: by contributing to making and aligns the plant floor reductions in the cost of doing business and with corporate initiatives increased productivity and efficiency, and by Competitive Increase competitive advantage Advantage by driving down production costs enabling new business processes or opportun- and increasing flexibility and res- ities. ponsiveness Continuous Accelerate continuous improve- Because RPM is an approach that spans all Improvement ment programs through increased categories of metrics such as Assets, Quality, data velocity and process auto- mation Manufacturing, and Cost, a single solution can deliver performance benefits in all of Quality Reduce the Cost of Quality with real-time operating data to im- these areas. When the measurement data for prove margins and fund product these metrics is linked to a continuous im- innovation provement program such as Six Sigma, the Capital Avoid capital expenditure and improvement cycle is accelerated and entire Expense peak outsourcing through better utilization of existing assets operations can rapidly move to higher levels Compliant Real-time information and process of performance. Manufacturing automation enable increased flex- ibility and responsiveness to It is important to distinguish real-time solu- ecosystem changes tions from solutions that provide information Table 6: RPM Contributes to Strategic on a daily or weekly basis. Real-time solu- Enterprise Performance tions make information “actionable” at the point in time when it has the greatest potential impact. It can mean the dif- ference between one or two items and a whole day‟s worth of out-of spec product taking up space, waiting for disposition as scrap or rework while the Copyright © ARC Advisory Group • ARCweb.com • 19
  20. 20. ARC Whitepaper • September 2007 customer goes waiting. Real-time solutions create ROI by exposing business opportunities that might otherwise be lost. SAP xMII enables Compliant Manufacturing for Life Sciences by synchroniz- ing manufacturing operations with business systems to deliver “one version of the truth” and driving manufacturing excellence. This unified view of manufacturing information is provided by the combination of Manufactur- ing Intelligence – a real-time analytics engine that aggregates and delivers unified visualization of events, alerts, KPIs, and decision support to production personnel and appropriate other parties through role-based Enterprise Portal dashboards - and Manufacturing Integration – a single, standards-compliant application enabling bi-directional SAP ERP connectivity with real-time plant floor applications to drive efficiency in enterprise business processes, wheth- er in a single plant or across multiple plants, business units, and regions. SAP xMII connects to a wide variety of plant systems and data sources, such as MES, DCS, HMI, Plant Historians, Laboratory systems, Maintenance sys- tems, and other data sources. It establishes the production context for data from these systems and makes the information visible to users and available to other applications. It also provides analytical tools to aid in decision- making and integration services to facilitate connectivity to business systems. SAP xMII collects and contextualizes plant data and make it visible to a va- riety of users. It supports optimal decision making by providing “unified” real-time information and analytical tools. Event-triggered alerts speed reac- tions, problem identification, and problem resolution. It provides workflow- based responses, which can be configured for certain alerts. SAP xMII‟s inte- gration capability includes synchronizing business processes across departments and operations and between business and plant floor systems. It scales to support multiple plants [Figure 6] with a normalized view of per- formance across disparate systems. SAP xMII plant data/information is readily available to inform tools for modeling new business processes and the change management process for implementing them. For too long, manufacturing has been isolated and most important produc- tion data has not been easily accessible. As manufacturing companies begin their push to improve responsiveness and performance, they will find what leading companies already know: Real-time Performance Management (RPM) solutions drive excellence in manufacturing performance through better manufacturing intelligence and integration. 20 • Copyright © ARC Advisory Group • ARCweb.com
  21. 21. ARC Whitepaper • September 2007 Fig 6: SAP xMII in a Multi-Plant Context Founded in 1986, ARC Advisory Group has grown to become the Thought Leader in Manufacturing and Supply Chain solutions. For even your most complex business issues, our analysts have the expert industry knowledge and firsthand experience to help you find the best answer. We focus on simple, yet critical goals: improving your return on assets, operational performance, total cost of ownership, project time-to-benefit, and shareholder value. All information in this report is proprietary to and copyrighted by ARC. No part of it may be reproduced without prior permission from ARC. You can take advantage of ARC's extensive ongoing research plus experience of our staff members through our Advisory Services. ARC’s Advisory Services are specifically designed for executives responsible for developing strategies and directions for their organizations. For subscription information, please call, fax, or write to: ARC Advisory Group, Three Allied Drive, Dedham, MA 02026 USA Tel: 781-471-1000, Fax: 781-471-1100, Email: info@ARCweb.com Visit our web page at ARCweb.com Copyright © ARC Advisory Group • ARCweb.com • 21
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